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Clients failing to understand important issues: research

Clients could be failing to understand a variety of important issues affecting them, from access to advice to adviser charges, a report has found.

The 20-page Engage Insight report, The Adviser Benchmark Survey, found a third of advisers were concerned that clients did not understand the issues affecting them.

Beyond this, one in four firms did not believe clients understood what made them different from other firms.

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The report, which used the results from research conducted among 220 firms in April 2014, looked at the areas of leadership and risk management, business strategies, client service proposition, client and stakeholder engagement and business and sales support.

It also highlighted “a lack of confidence in client understanding for the value of client service propositions. For instance, client service proposition pricing needs more focus to show high value, and is designed around the client journey”.

It added: “Client documentation is generally clear, but there is some uncertainty as to whether they match regulatory requirements or reflect clarity around client, product provider and regulatory relationships.”

When asked about leadership and risk management issues, one-fifth of respondents said they lacked a business plan that determined the costs for delivering advice.

On top of this, half of respondents said they had not factored in the costs of retaining clients. The report said: “In essence, adviser firms need to demonstrate at all times what they are doing for their clients to justify the ongoing fees charged.”

StatementPercentage of respondents agreeing
We do not have a business plan that determines the costs for delivering the advice service20%
We have not factored in the costs of on-boarding or retaining clients50%

Adviser view

Tim Rodgers, chartered financial planner for Leicestershire-based TM Asset Management, said: “Generally clients are au fait with charges and understand what they get, but you may get times when it is not so clear cut.

“Some clients with small and medium pots may not understand what effect the charges could have on them.”